Larry Sobal: Delaying mandate to offer health insurance means little

Earlier this month, the Obama administration announced it will not penalize businesses that do not provide health insurance in 2014. Instead, it will delay enforcement of a major Affordable Care Act requirement that would have required all employers with more than 50 employees to provide coverage to their workers.

As a result, employers who don't provide health insurance will be spared penalties of up to $3,000 per worker.

Depending on your political view, the recent announcement has only fueled the debate about the future of the massive law and its eventual impact on the U.S. health system. For those of you too busy enjoying summer to immerse yourself in the ongoing political rhetoric, read on.

First, there's the question of whether the administration has actually "suspended" the employer mandate (Section 1513 of the Affordable Car Act). Despite headlines to the contrary, the decision actually suspended the data reporting requirements (Sections 1502 and 1514 of the ACA, or equivalently Sections 6055 and 6056 of the Internal Revenue Code).

What it really means is that without that information, it will be impossible to enforce the employer mandate, since the IRS will not be able to prove that any particular individual does not have health insurance.

Supporters of the Affordable Care Act (i.e. Obamacare) argue that this delay is insignificant. Their rationale is that more than half of Americans, 170 million people, are covered by employer-sponsored health insurance. Of companies with at least 50 workers, 95 percent already offer health benefits.

It would stand to reason that the one-year delay of the penalties won't have a meaningful effect on jobs being the leading source of health care coverage, assuming that these employers continue to voluntarily offer health insurance for the same business reasons they have in the past. Furthermore, the argument is that this gives larger employers a chance to better prepare for the reporting requirements.

Here's where things get a little bit fuzzy (i.e. interesting). This decision did not impact the part of the Affordable Care Act that requires individuals to have health insurance beginning in January. As a result, without the employer information, it may be impossible to enforce the individual mandate as well, since the IRS will not be able to prove that any particular individual does not have health insurance.

Not surprisingly, opponents of the Affordable Care Act argue that the individual mandate should be suspended also, citing that it will be impossible to determine who is entitled to premium subsidies in the exchanges, or even who is eligible to obtain insurance through exchanges in the first place.

They state that if people begin to figure of that the individual mandate is irrelevant for 2014, younger healthier workers will not pursue insurance through the exchanges. They argue this was a key premise of the whole legislation, because it relied on the addition of younger healthier people into insurance plans to offset the high costs of covering sicker participants.

If you're confused, it's probably a good indicator that you are "of sound mind and body." As for me, here's what I know. U.S. health costs have been slowing down - and will continue to do so thanks in large part to a marketplace that is demanding better performance and moving to a model where value is rewarded instead of volume. While politicians continue to snipe at each other about mandates, meanwhile, the relevant changes will come from employers and providers fixing health care from the inside.

- Larry Sobal is system vice president for cancer and cardiovascular services at ThedaCare. He can be reached at 920-731-8900 or larry.sobal@thedacare.org.